N.Y. Comp. Codes R. & Regs. tit. 21 § 4230.6

Current through Register Vol. 46, No. 50, December 11, 2024

Section 4230.6 - Minority and women revolving loan trust fund

(a) The corporation shall establish minority and women revolving loan trust fund accounts in such amounts as the corporation may determine.

(b) Administering corporations selected by the corporation in accordance with subdivision (d) of this section shall use funds deposited into a minority and women revolving loan trust fund account as set forth in subdivision (e) of this section. Such funds shall consist of:

(1) the funds deposited by the corporation into the minority and women revolving loan trust account when the account is established pursuant to subdivision (a) of this section;

(2) repayments of the principal amount of trust fund loans; and

(3) interest earned by the corporation from the funds allocated to a particular minority and women revolving loan trust fund account beginning in the second year of an administering corporation's administration of same and thereafter.

(c) Administrative expense trust fund accounts.

(1) The corporation shall establish an administrative expense trust fund account in an amount equal to $25,000 for the benefit of each administering corporation. In addition to the foregoing amount, the corporation shall deposit into the administrative expense trust fund account:

(i) interest earned by the corporation from the funds allocated to the corresponding minority and women revolving loan trust fund account during the first year of an administering corporation's administration of same; and

(ii) payments of interest accrued on trust fund loans.

(2) Semi-annually, the corporation shall disburse to the administering corporation funds on deposit in the administering corporation's administrative expense trust fund account. Such funds shall be used for the payment of net administrative costs projected pursuant to a semi-annual budget approved by the corporation as same may be updated from time to time with the approval of the corporation. In no event shall an administering corporation request or receive more than $25,000 from its administrative expense trust fund account during its first year of administering its minority and women revolving loan trust fund account.

(d) Selection of administering corporations.

(1) To be eligible for selection by the corporation to administer a minority and women revolving loan trust fund account, an administering corporation must:

(i) represent a service delivery region;

(ii) have available to it staff with sufficient expertise to analyze loan applications, to monitor regularly trust fund loans, and have made arrangements to provide management or technical assistance to its clients; and

(iii) has established a trust fund loan committee.

(2) The corporation shall prepare and disseminate a request for proposals from administering corporations in the State seeking to be selected by the corporation to administer a minority and women revolving loan trust fund account. Said request for proposals shall require submission to the corporation of information necessary for the corporation to determine the eligibility of the administering corporation and the desirability of selecting a particular administering corporation to administer a minority and women revolving loan trust fund account.

(3) In determining whether to select a particular administering corporation meeting the criteria set forth in paragraph (1) of this subdivision to administer a minority and women revolving loan trust fund account, the corporation shall consider:

(i) the ability of the administering corporation to administer the trust fund lending program;

(ii) the extent of coordination with other publicly supported financial assistance programs;

(iii) the degree of public and private support for the administering corporation; and

(iv) whether all or part of the service delivery region is already being served by another administering corporation administering the trust fund lending program.

(4) The corporation will enter into an agreement with each administering corporation selected hereunder to administer a minority and women revolving loan trust fund account, which agreement shall set forth the terms and conditions for administering the account.

(e) Use of funds. An administering corporation may use funds deposited into a minority and women revolving loan trust fund account to provide trust fund loans for eligible trust fund projects undertaken by minority and women-owned business enterprises.

(f) Ineligible projects. Trust fund loans shall not be made available for the following projects:

(1) projects that would result in the relocation of any business operation from one municipality within the State to another, except under one of the following conditions:

(i) when a business is relocating within a municipality with a population of at least one million, where the governing body of such municipality approves such relocation; or

(ii) the administering corporation notifies each municipality from which such business operation will be relocated and each municipality agrees to such relocation;

(2) projects of newspapers, broadcasting or other news media, medical facilities, libraries, community or civic centers, or public infrastructure improvements;

(3) projects involving the refinancing of any portion of the total eligible trust fund project cost or other existing loans or debts of an applicant, except for the purpose of transferring to the employees or to other local interests ownership of a company that would otherwise depart from or cease or substantially reduce operations in the State. For the purposes of this paragraph, a substantial reduction of operations in the State shall mean:

(i) the loss by a minority and/or women-owned business enterprise of 25 or more permanent jobs; or

(ii) the loss by a minority and/or women-owned business enterprise of fewer than 25 permanent jobs, if such a loss would have a major adverse impact on the community in which the business is located;

(4) projects that would provide funds, directly or indirectly, for payment, distribution, or loan to owners, partners or shareholders of an applicant, except as ordinary income for services rendered;

(5) retail projects, except where the administering corporation finds there will be an increase in net new permanent jobs; and

(6) to the extent permitted by law, projects involving the making of a trust fund loan to:

(i) a full-time employee of the State or any agency, department, authority, public benefit corporation, or political subdivision thereof; or

(ii) a minority and/or women-owned business enterprise in which an employee described in subparagraph (i) of this paragraph directly or indirectly controls a majority ownership interest.

(g) Providing assistance. An administering corporation shall not approve a trust fund loan unless:

(1) the administering corporation has determined that the trust fund loan applicant is a minority and/or women-owned business enterprise, based upon a diligent investigation which may include, without limitation:

(i) interviews with persons holding ownership interests in or management positions with the trust fund loan applicant;

(ii) visits to the project site or to the site of the trust fund loan applicant's business operations; and

(iii) the review of the organizational documents and other books and records of the trust fund loan applicant, and such other documents as may be provided by the trust fund loan applicant pursuant to requests made by the administering corporation;

(2) the project being financed:

(i) is an eligible trust fund project;

(ii) is feasible; and

(iii) will comply with any applicable environmental rules or regulations;

(3) there is a reasonable likelihood of repayment of the trust fund loan; and

(4) the trust fund loan applicant has agreed to first consider persons eligible to participate in Job Training Partnership Act ( 29 U.S.C. 1501 et seq.) programs. Such persons shall be referred to the Trust Fund Loan applicant by administrative entities of service delivery areas created pursuant to such act or by the Job Service Division of the State Department of Labor.

(h) Approval of eligible trust fund projects.

(1) Each application for a trust fund loan shall be reviewed by the trust fund loan committee. The trust fund loan committee shall determine the feasibility of the project proposed in the application and the likelihood of repayment of the trust fund loan requested and shall recommend to the board of directors or other governing body of the administering corporation such action as the committee deems appropriate.

(2) The decision to approve or reject an application for a trust fund loan shall be made by a majority of the directors of the administering corporation and such decision shall be final.

(i) No member of the board or other governing body of an administering corporation shall participate in a decision on a project application when such member is a party to or has a financial interest in such project. Any member who cannot participate in a decision on a project application for such reason shall not be counted as a member of the board or other governing body for purposes of determining the number of members required for a majority vote on such application.

(ii) No employee or officer of any administering corporation shall be a party to or have any financial interest in any project that receives a trust fund loan.

(3) Upon approval of a trust fund loan and the satisfaction by the trust fund loan applicant of the conditions precedent to the closing of the trust fund loan, the administering corporation shall provide the corporation:

(i) a certification that the trust fund loan complies with the provisions of this section; and

(ii) a report which provides:

(a) the amount, term and annual interest rate of the trust fund loan, the collateral, if any, therefor, and the date anticipated for the closing of the trust fund loan;

(b) the name of the trust fund loan applicant;

(c) a description of the methods used by the administering corporation to ascertain that the trust fund loan applicant is a minority or women-owned business enterprise;

(d) a description of the project to be funded;

(e) the total eligible trust fund project cost. If the total eligible trust fund project cost exceeds the trust fund loan, the administering corporation shall identify all other sources of financing for the project, and the amount of financing to be provided by each, and shall verify that written commitments for such assistance have been obtained from each such source; and

(f) such other information as the corporation may require.

(4) Upon acceptance by the corporation of the administering corporation's certification, the administering corporation may draw down proceeds from its minority and women revolving loan trust fund account in the amount of any trust fund loan so accepted.

(i) Recordkeeping, auditing, and reporting.

(1) Each administering corporation shall maintain adequate books and records of its activities hereunder and shall submit annual reports to the corporation describing the financial assistance provided pursuant to this section including:

(i) the number of projects assisted;

(ii) the amount and type of each trust fund loan approved and/or advanced;

(iii) a description of each project assisted by each trust fund loan;

(iv) the number of jobs created or retained by each project;

(v) the amount of principal and interest of each trust fund loan paid and outstanding; and

(vi) such other information as the corporation may require.

(2) The corporation shall periodically and annually audit each administering corporation to ensure conformity to all aspects of trust fund loan transactions with the substantive and procedural provisions of this section.

(j) Fees and out-of-pocket expenses. An administering corporation may charge reasonable trust fund loan application and trust fund loan commitment fees pursuant to a schedule of fees adopted by the administering corporation and approved by the corporation, and may collect such out-of-pocket expenses as it may reasonably incur in connection with the processing of any trust fund loan application and the closing of any trust fund loan.

(k) Recapitalization of minority and women revolving loan trust fund accounts and administrative expense trust fund accounts.

(1) The corporation may recapitalize any minority and women revolving loan trust fund account and corresponding administrative expense trust fund account if:

(i) all funds initially deposited by the corporation in the minority and women revolving loan trust fund account have been disbursed or committed to finance eligible trust fund projects; and

(ii) all funds initially deposited by the corporation in the corresponding administrative expense trust fund account have been expended.

(2) Each administering corporation seeking recapitalization of its accounts shall submit an application for same developed by the corporation.

(3) In considering whether a minority and women revolving loan trust fund account or administrative expense trust fund account will be recapitalized, the corporation shall consider:

(i) the record of the administering corporation in administering the minority and women revolving loan trust fund account, including, without limitation, the number of projects assisted with trust fund loans, the amount and type of each trust fund loan, the types of projects assisted with trust fund loans, the number of jobs created or retained by projects financed with a trust fund loan, the amount of principal and interest of each trust fund loan paid and outstanding, and the trust fund loan loss history of the minority and women revolving loan trust fund account;

(ii) efforts made by the administering corporation to secure funds from other sources for loans and administrative costs; and

(iii) such other matters as the corporation may determine.

(4) Following its review and evaluation of any such recapitalization application, the corporation shall determine the amount, if any, of the recapitalization of any minority and women revolving loan trust fund account or administrative expense trust fund account, in its sole discretion, provided, however, that no more than 10 percent provided to an administering corporation hereunder shall be used to recapitalize its administrative expense trust fund account.

N.Y. Comp. Codes R. & Regs. Tit. 21 § 4230.6